S&P 500, Dow, Nasdaq notch 2nd week of gains as stocks end mostly higher Friday after strong January jobs report – MarketWatch
U.S. stocks ended mostly higher Friday, with all three major benchmarks scoring a second straight week of gains, after investors digested a much stronger-than-expected January jobs report that underlined expectations for an aggressive round of rate increases by the Federal Reserve.
The Nasdaq Composite led the way higher after strong results from Amazon.com Inc.
On Thursday, the Dow slumped more than 500 points, or 1.5%, the S&P 500 dropped 2.4% and the Nasdaq Composite tumbled 3.7%.
For the week, the Dow gained about 1.1%, the S&P 500 rose 1.6% and the Nasdaq climbed 2.4%. Each index notched a second straight week of gains, according to Dow Jones Market Data.
Stock market trade was choppy after the government reported Friday that the U.S. economy added 467,000 jobs in January and hiring was much stronger at the end of 2021 than originally estimated.
The unemployment rate ticked up to 4% from 3.9%, while the percentage of people in the labor force ticked up to a pandemic high of 62.2%.
“We got a lot of jobs, which is fantastic news,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors, in a phone interview Friday. And “it looks like we’ve got some additional people entering the workforce.”
Economists surveyed by The Wall Street Journal had forecast a payrolls rise of just 150,000 — and some had warned that a fall was possible due to hourly workers without paid sick leave being counted as without jobs. Analysts said investors had been prepared to look through a weak number, on expectations for a sharp reversal in February.
The strong January reading served to reinforce expectations the Federal Reserve will be aggressive in lifting interest rates and taking other steps to pullback on monetary stimulus as it attempt to rein in the highest inflation in decades.
“The party is kind of ending on the rate side,” said Exencial’s Courtney. The economy seems to have enough momentum to keep growth “strong” even if it slows from 2021.
Read: What a strong January jobs report really means for Fed’s March rate hike
Fed-funds traders increased bets the Federal Reserve would deliver a 50 basis point increase at its March meeting, rather than the typical move of 25 basis points. The CME FedWatch Tool showed fed-funds futures reflected a 27% chance of a half-point move, up from 14% on Thursday.
Meanwhile, Amazon.com shares AMZN, +13.54% soared 13.5% Friday, buoying the Nasdaq after the e-commerce giant delivered blowout results late Thursday. Some $11.8 billion of the $14.3 billion fourth-quarter profit it reported was from an investment in Rivian Automotive RIVN, +0.84%, which went public in the quarter. The company also raised the cost of a Prime subscription to $139 a year from $119 a year.
Read: Amazon Prime is raising its price: Here’s how much it has gone up over the years
Amazon’s performance saw the S&P 500’s consumer discretionary sector leading gains Friday, up 3.7%. In other sharp gains, financials closed 1.7% higher, while the energy sector rose 1.6%.
The S&P 500, tech-heavy Nasdaq and Dow all scored weekly gains, after breaking a four-session string of wins on Thursday. The big dip came after Facebook parent Meta Platforms Inc. FB, -0.28% missed sales and growth estimates, sending shares plunging. Its stock slipped 0.3% Friday.
Read: Facebook wasn’t Thursday’s only big loser—these 16 other Nasdaq-100 stocks dropped at least 5%
Although investors initially seemed “uncertain” about the strong jobs report, as it gives the Fed more “leeway” to hike rates, the market now appears to be “feeling good about it,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a phone interview Friday.
“We’re back above the 200-day average for the S&P 500,” said Wren. “If we consolidate here and hold these gains that would be a very positive sign.”
—Barbara Kollmeyer contributed to this report.
U.S. stock benchmarks were trading mixed Friday morning but market internals suggest that investors on New York Stock Exchange-listed are in a buying mood. The Arms Index Arms Index, a volume-weighted breadth measure, fell to 0.466, while many on Wall Street see declines below 0.500 as suggesting panic buying. The Arms Index is calculated by dividing the ratio of the number of advancing stocks over decliners by the ratio of the volume of advancing stocks over declining volume and the Arms index often falls below 1.000, as the buyers rush into advancing stocks. The Dow Jones Industrial Average undefined, however, was trading lower, down 98 points, or 0.3%, at 34,986, the S&P 500 index undefined was flat at up by less than 0.1% at around 4,479. The Nasdaq Composite Index undefined, meanwhile, was up 0.7%, at about 13,977. The moves come as the U.S. economy added 467,000 jobs in January and hiring was much stronger at the end of 2021 than originally estimated, the government reported Friday. The unemployment rate ticked up to 4% from 3.9%. Economists surveyed by The Wall Street Journal had forecast a payrolls rise of just 150,000-and some had warned that a fall was possible due to hourly workers without paid sick leave being counted as without jobs. Analysts said investors had been prepared to look through a weak number, on expectations for a sharp reversal in February.
Christine Idzelis is a markets reporter at MarketWatch and is based in New York.
William Watts is MarketWatch’s senior markets writer. Based in New York, Watts writes about stocks, bonds, currencies and commodities, including oil. He also writes about global macro issues and trading strategies. Before moving to New York, he reported for MarketWatch from Frankfurt, London and Washington, D.C.
